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We study departures from network neutrality through implementinga Quality of Service tiering regime in which an ISP charges for prioritizationon a non-discriminatory basis. We find that Quality of Service tiering may bemore efficient in the short run, because it better allocates the existing networkcapacity, and in the long run, because it provides higher investment incentivesdue to the increased demand for priority services by the entry of new congestionsensitive content providers. Which network regime is the most efficient dependson the distribution of congestion sensitivity among content providers, but aguideline is that the regime that provides higher incentives for infrastructureinvestments is more efficient in the long run.

Network Neutrality and Congestion Sensitive Content Providers: Implications for Content Variety, Broadband Investment, and Regulation